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Section Divider Title Goes Here INTERGENERATIONAL BENEFITS
Erica N. Cordova, J.D.
Employee Benefits Attorney
PROGRAM OVERVIEW
I. Generational Values
Defining the generations and evaluating their values
II. Group Medical Plan Rules and Mandate
What rules impact the multigenerational workforce
III. Customizing Your Benefits Menu for All
Generations
Benefit strategies to engage all generations
IV. Risk Profiles and Benefits Expectations
Developing an intergenerational approach to workforce risk and reward
Intergenerational Benefits | 2
2
GENERATIONAL
VALUES
Section one
GENERATIONAL VALUES – Defined
Born 1925-1945
Smallest percentage of
workforce
Experienced; Dedicated;
Loyal
Born 1946-1964
Largest percentage of
workforce
Service and team-oriented;
Dedicated
Born 1965-1980
Second largest percentage of
workforce
Adaptable; Independent;
Creative
Born After 1980
Third largest percentage of
workforce
Optimistic; Multi-task;Tech
savvy
Traditional Baby Boomer Generation X Millennial/Gen Y
Intergenerational Benefits | 4
GENERATIONAL VALUES – What’s Important
Traditional Baby Boomer Generation X Millennial/Gen Y
Motivation
Personalization; Managers invested in
overall good of company
Rewards
Tangible symbols of recognition
Motivation
Flexibility; Challenges; Leaders who involve them to make a difference
Rewards
Recognition; Promotion
Motivation
Ability to work independently on their own flexible
schedule
Rewards
Free time; Development
Motivation
Flexibility; Opportunity for
personal and career growth
Rewards
Tangible evidence of credibility
http://assets.aarp.org/www.aarp.org_/articles/money/employers/leading_multigenerational_workforce.pdf
Intergenerational Benefits | 5
3
GROUP MEDICAL PLAN
RULES & MANDATES
Section two
RULES & MANDATES
Considerations for the Employer-Sponsored Plan
PPACA
• Employer mandate
• Adult dependents
• Preexisting conditions
• Non-discrimination
• Preventive care
• Wellness
ERISA
• Reporting requirements
• Fiduciary requirements
• Disclosure requirements
Medicare
• Medicare secondary payer
• Medicare Part D
Marketplace
• Premium reimbursement arrangements
• New mid-year election change
MARKET
ERISA
MEDICARE PPACA
Intergenerational Benefits | 7
THE EMPLOYER MANDATE
PHASE IN BASED ON EMPLOYER SIZE
Employer Size 2015 Plan Year 2016 Plan Year +
1–49 full-time employees or
full-time equivalents
Does not apply Does not apply
50-99 full-time employees
or full-time equivalents*
Does not apply Employer must offer
coverage to 95% of full-time
employees and dependents
to age 26
100 or more full-time
employees or full-time
equivalents
Employer must offer
coverage to 70% of full-time
employees and dependents
to age 26
Employer must offer
coverage to 95% of full-time
employees and dependents
to age 26
“PAY OR PLAY” THRESHOLD
PPACA
Intergenerational Benefits | 8
4
THE EMPLOYER MANDATE
“PAY OR PLAY” WORKBOOK
No penalty
NO
NO
NO
$3,000 / Full-Time Employee receiving tax credit
$2,000 / Full-Time Employee (less first 30)*
Do you offer coverage to substantially all full-time
employees?
YES
YES
YES
Is the coverage affordable? (< = to 9.56% of income)
Does the plan provide “minimum value”? (60%+ of total allowed costs)
*80 for plan years beginning in 2015; 30 for PYB in 2016 and after
PPACA
Intergenerational Benefits | 9
HEALTHCARE REFORM IMPLEMENTATION
Mandates Impacting The Intergenerational Workforce
Employer Mandate
• Applicable Large Employer (ALE) must offer affordable, minimum value coverage for full-time employees. Must also offer minimum essential coverage to dependents (natural born and adoptive children) of full-time employees.
Adult Dependent Coverage
• A group health plan offering dependent coverage must make dependent coverage available until the child reaches age 26.
Preexisting Conditions
• A group health plan or insurer may not impose any preexisting condition exclusion with respect to the plan or coverage.
PPACA
Intergenerational Benefits | 10
HEALTHCARE REFORM IMPLEMENTATION
Hypothetical Illustrations
Employer Mandate
• Employer plan provides that Medicare eligible employees are ineligible to enroll.
• An ALE must offer coverage regardless of age or entitlement to other coverage.
Adult Dependents
• Employee’s 25 year-old son is married and employed with an offer of coverage. Employee wishes to enroll her son on the plan.
• Eligibility may not be conditioned on financial status, alternative coverage, residency, student status or marital status.
Pre-Existing Conditions
• Applicant with history of breast cancer treatment receives job offer contingent on waiver of the health plan.
• A group health plan or insurer cannot impose any preexisting condition exclusions on the plan.
PPACA
Intergenerational Benefits | 11
5
HEALTHCARE REFORM IMPLEMENTATION
Mandates Impacting The Intergenerational Workforce
Non-discrimination
• Soon, insured group health plans must comply with non-discrimination requirements for self-funded plans, including rules against discrimination in favor of HCIs with respect to eligibility and benefits.
Preventive Care
• Non-grandfathered health plans are required to provide coverage, without cost-sharing, for preventive services including immunizations, screenings, physicals and certain pharmaceuticals
Health Outcomes Differentials and Incentives
• Must: (1) offer chance to earn reward at least once per year; (2) not provide reward exceeding 30% (50% tobacco) of EE-only cost; (3) be reasonably designed to promote health; (4) offer uniform availability and Reasonable Alternative Standard (RAS); (5) disclose RAS.
PPACA
Intergenerational Benefits | 12
HEALTHCARE REFORM IMPLEMENTATION
Hypothetical Illustrations
Non-
Discrimination
• Employer seeks to reward seniority with increasing HSA contributions per year of service.
• Proceed with caution! Senior employees tend to be HCEs so the plan may be discriminatory.
Preventative Care
• Employer denies coverage for birth control as a preventive service based on a religious exception.
• Access to birth control is a required preventive service for all but a few employers. Certain closely-held companies may avoid the mandate, but most may not.
Wellness Initiatives
• Employer offers a $80 premium discount for non-smokers on a $150 monthly premium with no alternative to obtain the incentive.
• The $80 differential for smokers exceeds the 30% and 50% thresholds. Also, the plan failed to offer a RAS.
PPACA
Intergenerational Benefits | 13
REGULATION OF TAX-ADVANTAGED PLANS
ERISA
Reporting Requirement
Fiduciary Duties
Disclosure Requirement
ERISA Mandates Impacting an Intergenerational Workforce
Federal Law Regulating
“Employee Benefit Plans”
• 100+ Participant plans
required to file form
5500 annually
• Excludes plans not
subject to ERISA
• Excludes church and
governmental plans
• Exclusive benefit of plan
participants and
beneficiaries
• Prudent person – Use
care, skill, diligence
• Abide by plan
documents
• Plan document
• Summary Plan
Description (SPD) &
Summary of Material
Modification (SMM)
• Summary Annual
Report (SAR)
ERISA
Intergenerational Benefits | 14
6
REGULATION OF TAX-ADVANTAGED PLANS
ERISA
Reporting Requirement
Fiduciary Duties
Disclosure Requirement
Understanding ERISA Risk Tolerance
Federal Law Regulating
“Employee Benefit Plans”
• Low risk
• Reporting obligation
unchanged by demographics
• Moderate risk
• +/- Treatment of certain
employees or groups is risky
• High risk
• Electronic disclosure of
plan documents
ERISA
Intergenerational Benefits | 15
REGULATION OF TAX-ADVANTAGED PLANS
Compliance Considerations for Intergenerational Employers
FIDUCIARY DUTIES
Written instrument naming one or more fiduciaries
Exclusive purpose of providing benefits and defraying reasonable admin costs
Prudent person acting in a similar capacity
and like expertise
Must follow governing documents to the extent consistent with ERISA
Personal liability, civil penalties and
criminal penalties
DISCLOSURE REQUIREMENTS
Must provide plan document within 30 days upon request
Must provide SPD within 90 days of the participant entering the plan
Must provide SAR within 9 months after the end of the plan year
Electronic distribution safe harbor (workplace access = yes; no access = consent)
Civil penalties up to $110 a day (Max. $1,100 Per Request
ERISA
Intergenerational Benefits | 16
REGULATION OF TAX-ADVANTAGED PLANS
Employer Potholes Along the Compliance Highway
FIDUCIARY DUTIES
“We want to allow one of our longtime executives to add his domestic partner even though domestic partner coverage is not in
our contract.”
“There may be some other reasonable plan options available that would best serve our
participants but we tend to go with the cheapest option available.”
“We always offer COBRA to ex-spouses, even where not required by state law, but it turns out that our plan documents do not allow for this.”
DISCLOSURE REQUIREMENTS
“I am the new Director of Benefits and I’ve asked about the plan documents. Everyone says Frank (who left 5 years ago) used to handle that and no one knows if we have
documents now.”
“We give all new hires a 10-page new hire packet with our Benefits Guide, but I’m pretty sure it doesn’t have SPDs. The SPDs are the
really long documents, right?”
“We have a lot of industrial jobsites and find it easier to mail a postcard to all of our
employees with a link to the company intranet where they can view all of the documents.”
ERISA
Intergenerational Benefits | 17
7
NON-EMPLOYER MEDICAL OPTIONS
Other Coverage Options for the Intergenerational Workforce
Medicare
• Health insurance program for: (1) age 65+; (2) under age 65 with disabilities; and (3) all ages with ESRD
• Provides: (1) hospital insurance; (2) medical insurance; and/or (3) prescription drug coverage
Medicaid/CHIP
• Health insurance program for: (1) low-income; (2) families & children; (3) pregnant women; (4) elderly; and (5) disabilities
• Provides free or low-cost care – coverage and costs vary from state to state
Marketplace
• Health insurance program for all U.S. Citizens or nationals living in the U.S. And not enrolled in Medicare
• Provides: (1) hospital insurance; (2) medical insurance; and/or (3) prescription drug coverage
MEDICARE MARKET
Intergenerational Benefits | 18
NON-EMPLOYER MEDICAL OPTIONS
The Medicare Formula
Medicare
Part A – Hospital
Insurance
Part B – Outpatient
Medical Insurance
Part C – Medicare
Advantage
Part D – Prescription
Drug Coverage
MEDICARE
• Parts A & B equal “traditional” Medicare. The combination of
hospitalization and outpatient service make up the core of the
Medicare benefit.
• Part C is the Medicare equivalent of an HMO or a PPO, referred to
as “Medicare Advantage.” These plans are insured by a private
insurance company and include
hospitalization and outpatient service.
• Part D is the Medicare Prescription
Drug Program, referred to as “Part D,” which provides supplemental
pharmacy benefits through a private insurance company
.
Intergenerational Benefits | 19
NON-EMPLOYER MEDICAL OPTIONS
Medicare Compliance Considerations for Employers
MEDICARE SECONDARY PAYER
Determine whether employer or Medicare pays first
Generally applies to 20+ EE employers with limited exceptions
Prohibits financial or other incentives not to enroll in
employer coverage - $5,000/EE
MEDICARE PART D
Provides for Medicare prescription drug coverage
All plan sponsors must provide Medicare Part D notice by Oct. 15
annually & disclosures to CMS
Employee enrollment in part D could cause permanent loss of
employer coverage
MEDICARE
Intergenerational Benefits | 20
8
NON-EMPLOYER MEDICAL OPTIONS
Considerations for Employers with Other Medical Coverage Options
Mid-Year Election Change – Below 30
Hours Per Week
• Hours reduced below 30 hours/week even if no loss of eligibility
• Must obtain other MEC by 1st of the month following revocation
• Employer may rely on employee’s reasonable representation
Premium Reimbursement Arrangements
• Reimbursement of individual premiums prohibited under the PPACA
• Prohibited for pre-tax and post-tax reimbursement arrangements
• Compensation in lieu of benefits permissible – exercise caution
Mid-Year Election Changes – Intent to Enroll in Exchange
• ER non-calendar open enrollment or exchange special enrollment
• Must have other MEC effective by day following last day of coverage
• Employer may rely on employee’s reasonable representation
MARKET
Intergenerational Benefits | 21
CUSTOMIZING YOUR
BENEFITS MENU
Section three
CONSUMER-DRIVEN HEALTH EXPENSE MANAGEMENT
Unlocking the Potential of the High-Deductible Health Plan
HIGH DEDUCTIBLE HEALTH PLANS
Lower premiums/higher OOP costs
EE pays until high deductible met
HSA compatible
Minimum deductible: $1,300/$2,600
Pros & Cons
Manage your own health care costs
Tax-free HSA funds; High OOP now
Great if mostly preventive care
TRADITIONAL HEALTH PLANS
Higher premiums/lower OOP costs
Copays with lower deductible
Not HSA compatible; FSA available
Minimum deductible: None
Pros & Cons
Less control over your health costs
Use-or-lose FSA – limited rollover
Better for non-preventive care
Intergenerational Benefits | 23
9
HSA Must Be
Enrolled in QHDHP
Min. Deductible:
$1,300/$2,600
Limits: $3,350/$6,650
55+ Catch Up: $1,000
Qualified Medical
Expenses
(Rollover & Portable)
LTC / Medicare Premiums;
Non-Qualified Medical
Expenses 65+
No Other Non-HDHP Coverage
(Medicare; FSA; HRA; Clinic)
Comparable ER Contributions
Required
(Unless 125 Plan)
CONSUMER-DRIVEN HEALTH EXPENSE MANAGEMENT
Unlocking the Potential of the Health Savings Account
HSA
Intergenerational Benefits | 24
HSA Employer Must
Sponsor a Section 125 Plan
Cafeteria Plan
Up to $2500 per year (2015)
Employee-only Contributions
Available for Health &
Dependent Care
“Use it or Lose it” with Grace Period or Roll-
over
Pre-tax Contributions
CONSUMER-DRIVEN HEALTH EXPENSE MANAGEMENT
Fortify the Platform with Financial Savings Accounts
FSA
Intergenerational Benefits | 25
HSA Employer-only contributions
Reimbursement of medical expenses
(No premiums)
General purpose requires
integration with medical plan
May fund with employer wellness
incentives
Non-integrated for Limited Excepted Benefits
(Vision & Dental)
Subject to non-discrimination rules under section 125
CONSUMER-DRIVEN HEALTH EXPENSE MANAGEMENT
Fortify the Platform with Health Reimbursement Arrangements
HRA
Intergenerational Benefits | 26
10
PLAN RESTRICTIONS & HEALTH OUTCOMES
EMPLOYEE ASSISTANCE
Counseling & support for
personal issues
Considerations
All EEs or plan participants
Discrimination
WELLNESS
Incentives up to 30% of EE-only
cost
Considerations
Health-contingent
Reasonable alternative Std.
Discrimination
TOBACCO
Incentives up to 50% of EE-only
cost
Considerations
Random testing
Reasonable alternative Std.
Reward/Penalty
SPOUSAL RESTRICTIONS
Exclusions & restrictions on spousal plan participation
Considerations
Cost vs. Benefit
Based on other coverage
Discrimination
Focus on Health & Sustainability to Balance the Risk/Reward Equation
Intergenerational Benefits | 27
NON-MEDICAL BENEFITS
Adding Value With Non-Traditional Benefits
• On-site fitness
• Childcare
• Free snacks & drinks
• Casual dress
• Personal development
• Tuition reimbursement
• Mentoring
• Financial planning
• Commuter benefits
• Retirement funding
• Equity
• Flex Time
• Telecommute
• Compressed work week
• Vacation Time & leave
Work-Life
Balance
Financial Support
Workplace Perks
Development
Boomers; Gen X; Gen Y
All Generations
Gen X; Gen Y Gen X; Gen Y
Intergenerational Benefits | 28
RISK PROFILES AND
BENEFIT
EXPECTATIONS
Section four
11
UNDERSTANDING THE ISSUES
An Intergenerational Approach to Workforce Risk & Reward
RISK PROFILE
Presenteeism (medical issues or depression)
Absence related to medical concerns
Resistant to change
Lifestyle consequences (alcohol & tobacco)
Intolerant of inconsistency
Appreciate organizational hierarchy and respect leadership
BENEFIT EXPECTATIONS
Traditional health plans
Long-term care
Retirement strategies with emphasis on private pension and Social Security
Healthcare transition assistance
Face-to face interaction
Employer Paternalism
Resistant to health outcomes with complex reward structures
TRADITIONAL WORKFORCE (1922-1945)
Intergenerational Benefits | 30
UNDERSTANDING THE ISSUES
An Intergenerational Approach to Workforce Risk & Reward
RISK PROFILE
Financial issues related to retirement planning & wage replacement
Adverse to isolation and telecommuting
Preseentism & absence related to care of ailing relatives and long-term care
Expectation of relationship between compensation and tenure
Sense of self defined by work-related accomplishments
Effects of chronic illness and a life-time of working condition injuries appearing
BENEFIT EXPECTATIONS
Traditional health plans w/ rich pharmacy benefits
Wage replacement, disability, long-term care
Combination of defined contribution & defined benefit retirement strategies
Healthcare transition assistance
Traditional welfare benefits (dental, vision, receptive to EAP)
Health outcomes programs designed to reduce illness/promote prevention
BABY BOOMER WORKFORCE (1946-1964)
Intergenerational Benefits | 31
UNDERSTANDING THE ISSUES
An Intergenerational Approach to Workforce Risk & Reward
RISK PROFILE
See self as a marketable commodity
Appreciate and respect a diverse workplace
Expect internal promotion
Life indicators of marriage, divorce, child custody, paternity
Pregnancy & smoking-related illness prevalent
Comfortable with authority but not impressed with titles
BENEFIT EXPECTATIONS
Low-deductible consumer-driven health
Wage replacement & disability insurance
Individual account-based retirement strategies
Dependent care
Education-related benefits (tuition reimbursement & workplace flexibility)
Severance-related assurances
GENERATION X WORKFORCE (1965-1980)
Intergenerational Benefits | 32
12
UNDERSTANDING THE ISSUES
An Intergenerational Approach to Workforce Risk & Reward
RISK PROFILE
Financial issues (savings, credit, loan & debt management)
Desire to create change & make an impact
Flexibility in work-life balance (emphasis on life)
Require instant gratification with a short attention span
Effort can be separated from reward (+/- pay for performance)
Multi-taskers requiring team-based work in a creative atmosphere
BENEFIT EXPECTATIONS
High-deductible/consumer driven health
Catastrophic Accident/Illness
Equity Incentives (Stock, SARs, Options)
Commuter & transportation benefits
Adoption, embryo services, related counseling
On-sight dining, health care, wellness
MILLENNIAL (GEN Y) WORKFORCE (1980-1994)
Intergenerational Benefits | 33
DISCUSSION
Intergenerational Benefits | 34
BENEFIT SUMMARY BY
GENERATION
Summary
13
SUMMARY
Benefit Strategies By Generation
Traditional Baby Boomer Generation X Millennial
HDHP - Higher √ √
HDHP - Lower √ √ √ √
Traditional √ √
HSA* √ √ √ √
FSA √ √ √ √
Wellness √ √ √
√
EAP √ √ √
Intergenerational Benefits | 36
SUMMARY
Benefit Strategies By Generation
Traditional Baby Boomer Generation X Millennial
Dental √
√
√ √
Vision √ √ √ √
Flexibility √ √ √
Financial √ √ √ √
Development √ √
Office Perks √ √
Intergenerational Benefits | 37
SUMMARY
Benefit Strategies By Generation
Traditional Baby Boomer Generation X Millennial
Eldercare √
√
Childcare √ √
Retirement
Incentive
√
√
Life √ √ √ √
Long-Term
Care
√
√
Supplemental √ √ √ √
Intergenerational Benefits | 38